SIA posts 21% lower Q1 net profit of S$111m

Singapore

NATIONAL carrier Singapore Airlines' net profit for the first quarter slipped 21 per cent to S$111 million on the back of higher share of losses from associated companies, net finance charges and expenditure.

For the three months to June period, improvement in the group's joint-venture airline in India, Vistara, was offset by higher estimated losses at Virgin Australia while the adoption of accounting rules on leases and additional financing for fleet renewal and growth pushed up finance charges.

Expenditure rose nearly 7 per cent to S$3.9 billion with a nearly 9 per cent uptick in net fuel cost led by capacity expansion and a stronger US dollar. Operating profit improved by 3.6 per cent to S$200 million

Revenue came in 6.7 per cent higher for the quarter under review to S$4.1 billion from S$3.8 billion. Flown revenue was up 6.3 per cent with passenger flown revenue improving by nearly 9 per cent, buoyed by traffic growth and increase in capacity.

Despite the significant capacity injection, RASK (revenue per available seat-kilometre) improved 1.3 per cent. Cargo flown revenue declined 8.4 per cent on lower cargo yield and cargo load factor due to weak cargo demand amid trade uncertainties.

Earnings per share stood at 9.4 Singapore cents versus 11.8 Singapore cents previously. No dividend was recommended, same as the previous corresponding period.

Operationally, both the parent airline company and the group's engineering arm SIA Engineering fared better over the first quarter while SilkAir and budget carrier Scoot put out weak showings.

The parent airline company's operating profit rose 28 per cent to S$232 million on the back of "robust" passenger flown revenue growth owing to a 9 per cent increase in passenger traffic. Passenger load factor rose 1.2 percentage points to 83.2 per cent, the highest on record for the first quarter, notwithstanding a 7.4 per cent capacity growth. RASK improved 2.4 per cent or 4.9 per cent on a constant currency basis.

SIA Engineering's operating profit rose 80 per cent to S$18 million led by lower expenditure.

SilkAir turned in an operating loss of S$16 million against a marginal profit of S$200,000 a year ago as it was significantly impacted by the grounding of its six 737 MAX 8 aircraft. The resulting capacity reduction coupled with a 2.9 per cent yield contraction led to lower revenue while expenditure rose 2.5 per cent primarily due to costs related to the MAX 8 grounding.

Scoot posted an operating loss of S$37 million from a S$1 million operating profit a year ago on higher expenditure. Other contributing factors included restrained capacity growth and lower yields.

SIA said that passenger bookings in the forward months are tracking closely against capacity growth, supported by premium cabin traffic to key markets. Air freight demand has softened amid ongoing trade disputes and uncertain global economic conditions which are clouding the outlook for passenger demand over the longer term, it added.

SIA shares finished five Singapore cents lower at S$9.67 on Wednesday.